Movertrade Corp.

vs COA and DPWH

Gr. No. 204835, September 22, 2015

FACTS:

February 7, 1996, petitioner and respondent Department of Public Works and Highways (DPWH) entered into a Contract Agreement
for dredging and other related works in Pampanga Bay and the primary Pasac-Guagua-San Fernando Waterways in Pampanga in the
total amount of P 188,698,000 The Mount Pinatubo Emergency-Project Management Office of respondent DPWH, headed by Director
Soriquez.

Due to the alleged absence of spoil sites, petitioner requested permission from Director Soriquez to allow it to undertake side dumping.
However, Director Soriquez denied the request and reminded petitioner that side dumping was not allowed. As per the report of Engr.
Bustos, Area Engineer petitioner could still pump the dredge spoils to the following spoil sites: Pascual "A," Pascual "B," and the Regala
fishpond.

Despite the denial and prohibition by Director Soriquez and Engr. Bustos, petitioner continued to side dump. When the project was in
its final phase of completion, petitioner wrote a letter dated October 15, 1997 asking for payment for the dredging work it rendered.

On October 24, 1997, Director Soriquez issued a letter informing petitioner of the denial of its request for payment. Upon completion
of the project, the amount of P 7, 354, 897 for dredging work rendered was not paid. Petitioner filed money claim with COA against
respondent DPWH for payment of the dredging works.

COA denied its claim and ruled that petitioner is not entitled to payment for the dredging works for breach of contract. Paragraph 11 of
the Contract Agreement prohibits side dumping as it specifically requires that dredge spoils should be dumped at pre-designated areas
to prevent them from spilling back into the channel.

Petitioner moved for reconsideration it is still entitled to payment under the principle of quantum meruit. COA explained that the said
principle is not applicable as there is a written contract entered into by the parties.

ISSUE: Whether or not petitioner is entitled to the payment of P7,354,897.10 for dredging works.

HELD:
NO.

Under paragraph 11 of the Contract of Agreement, petitioner should dispose of the dredge spoils by dumping them at the pre-designated
areas provided by respondent DPWH. It is evident from the records that respondent DPWH provided spoil sites to petitioner. specifically
mentioned Pascual "A," Pascual "B," and the Regala fishpond as designated spoil sites.

DPWH consistently prohibited side dumping through its letters. Petitioner’s blatant defiance of the prohibition on side dumping is a
clear violation of the contract that should not be ignored just because the petitioner had completed the project.

It is a basic principle in law that contracts have the force of law between the parties and should be complied with in good faith. In this
case, the contract specifically provides the manner of disposing dredge spoils. Petitioner cannot unilaterally change the manner of
disposal without first amending the contract or obtaining the express consent or approval of respondent DPWH. Otherwise, petitioner
would be guilty of breaching the contract.

DISMISSED